Your Questions About Household Budgets Examples

Laura asks…

Why are so many horrible things going on at once in USA economy?

either things that are worst ever or worst in a long long time ..since world war 2 or in the last 25 years etc…

just to give a few quick examples(again this is not the entire list, but just examples). Record budget deficits, record trade deficits, rerord consistently high gas prices, record unaffordably high health care costs, several years of declining real wages, massive illegal immigration problem where we seemingly have lost control of who is allowed in this country, record foreclosures, record car repossessions, record household credit card debt, ) it is not enough to say as some suggest that things are cyclical and good and bad times comes or that since our economy is larger that 25 years ago that every number is naturally bigger thus explaining the “Records”. Clearly something is wrong. The question is …how did we get here? I am looking for some honnest intellectual analysis, instead of propaganda.
I see some people just prefer to pretend there is nothing wrong. Notice how their typical response is “there is nothing wrong…is all cyclical”..but they dont go into any serious depth to explain what is going?? why like I said, are all these things happening right now.
The low uemployment has been touted for years now as a sign of our booming economy…and even as justification why massive illegals influx is not a problem..that our economy is doing so great we need more people coming here by the millions to take extremely low paying jobs,etcc….well….if your factory closes and you lose your $18 an hour job and go take one at a fast food joint to make ends meet at $8 dollars an hour…you are still considered employed….and you are not on an unemployent rolls. So go sell that one elsewhere to people who don’t really know what’s going on.

richmama answers:

You must be young.

Early 70s, runaway inflation, gas not available at any price and lots of unemployment.

Not to mention that brief dive in 87, or the first Saddam sell off in the early 90s; or the March-2000 tech meltdown….. Do i need to keep going on or is your memory refreshed. Oh, that little thing called 9-11 kinda put a damper on things…..

Heck a quarter or two of slow growth and increased commodity values is hardly worthy of this “sky is falling” mentality.

Mark asks…

To what extent can the neoclassical labour-leisure choice model explain trends in female participation rates?

I am revising for an exam in labour economics and this is a question from a past paper. I’m trying to write a model answer, in case something similar comes up on the real exam. How would you answer the question?

I was thinking: introduce the answer by giving a definition for the labour supply participation rate. Next, explain the labour supply model where workers make their decisions based upon utility maximization, and draw an indifference curve/budget line diagram to illustrate this idea.

Then, once the model is explained, I could give some figures for female participation rates (I need to obtain and memorize these, in case this question comes up on this year’s paper, but for simplicity’s sake let’s just say that female labour supply has increased massively over the past 50 years).

I think this is where the crucial part of the question comes up, so some help here would be particularly helpful. I could then state and briefly explain the factors that affect labour supply for females (increase in wages over time, increased household productivity, reduced birthrates, and changes in cultural attitudes/legislation towards women in work), and then show whether (and if so, how) they would affect the position of the indifference curve and budget line. For example, an increase in wages would rotate/pivot the budget line upwards.
I know that household productivity and reduced birthrates could be incorporated into the model, but could someone explain to me what effect they would have on the indifference curve and budget line?
And I’m pretty sure that changes in cultural attitudes/legislation, although increasing the participation rates of women over time, couldn’t be specifically incorporated into the model – is that right?

So I’m thinking that a reasonable conclusion would be that the model can explain a number of the factors, although not all of them.

What else would be important to include? I’m not sure whether writing about the backward-bending supply curve is necessary; what are your thoughts, based upon the question?

Any help/suggestions/explanations would be greatly appreciated – I want to be as prepared as possible, should a question like this turn up.

Thank you!

richmama answers:

I’m not sure that I completely understand what you are trying to convey, however, I would like to add that there are more women in college than men, and that has been happening now for some time. It is my theory that men are becoming complacent in our society, and becoming low achievers, due to their outlook and lackadaisical attitudes, of life in general. It has become more common place for the women to take charge and do everything, while the men lay back and do nothing! It is a downward trend that I do not see ending, anytime soon.

Sandra asks…

do you think spouses should merge finances?

I am married and my husband and I see absolutely no reason to do so. We each have our own checking and savings accounts. He gives me money for rent and we split up the other household bills, for example he pays the cell phone bill and I pay the car insurance. We would like to buy a home in a few years and are each saving in our own accounts. We discuss finances frequently and help each other with our budgeting. But I see no reason to merge accounts. This works very well for us. What do you guys think? Why do people feel it is necessary to merge money? PS we have no kids and do not want any, if that’s a deciding factor.
Don’t get the idea that we don’t share money. We definitely do. I’m just talking about having joint accounts. We would never let the other one go without something if they were short on cash.

richmama answers:

Good for you, I think this is a great idea. One of the top, if not THE top thing couples argue about is money. With separate accounts, there will never be any problem with “Why did you spend XXX on YYY?” or discussions on how to use “our” money. I plan on doing the same thing next year.

William asks…

Feel guilty after buying non-necessary items – please help.?

I feel quite guilty and get a lot of buyer’s remorse after I buy items for myself or non-necessary items. I don’t know why.

I do not have a shopping problem. I like buying essentials that we get use out of. But when it comes to non-100% essential items; I think about it too much – whether or not I should buy it – to the point where it bothers me. Afterwards, I feel guilty for spending money on something we didn’t truly ‘need’.

I have Microsoft Money installed, always have been good with budgeting and finance, and I keep monthly tabs on how much we’re spending: groceries, household, gifts to ourselves, pet, baby, etc etc…

2 Examples: I bought slipcovers to protect our sofas (did need) and they turned out to be a true hassle. I should have kept the packaging and returned in time but I didn’t. I feel bad about that.

Then last night, I bought a quilt and shams because I’ve been wanting a quilt for a while, when we already have a lot of bedding, none of quilt-related though. My husband said buy it, he wanted to get me something for mother’s day beyond the $15 toy he got me. I almost put it back and didn’t buy it, but I didn’t want to make a big deal about it in front of hubby, and it was pretty. It cost $72 or so last night. Then I think the $ could have gone for baby’s birthday toys or fixing something on the house instead of for me and the bed.

Why can’t I just feel okay about it and things like this? I constantly think about it and whether or not it’s okay to keep…it takes the joy out of things. I feel nervous about it too.

We don’t have any financial problems, no credit card debt and we have a savings. So why do I get so guilty? Any help/suggestions on how to deal w/this? Thank you!
If it matters, I forgot to mention that only my husband works. I take care of my 10-month old son during the day, alone. So technically he earns all the $.

richmama answers:

Ah, the true mother syndrome. Give, give, give, and never take for yourself.
I once owned only two pairs of jeans, one with holes I could put my fist through, and only one pair of shoes that were literally falling apart because I felt too guilty to go buy new ones when I could have spent the money on something needed for the kids and the house.
Believe me, sweetheart, you DO earn it. Your husband may be the only income source, but you earn what you get.
One way to get over this bad feeling of letting yourself have items you don’t “need” and not feel guilty about it is to put into your budget an allowance that you pay yourself weekly or monthly, in what ever amount you feel comfortable with financially, that you are allowed to spend in any way you want. That will be YOUR money for services rendered. And you can spend or save it in any manner you choose.
Did you see in the news recently where a “housewife” earnings would top $138,000 a year if they were paid for their services?
Give yourself an allowance and stop feeling guilty.

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